I/M/O
The 2004/2005 Annual Compliance Filing For An Increase In The Statewide Electric
And Gas Permanent Universal Service Fund Program Factors Within The Electric
And Gas Societal Benefits Charge (Sbc) Rates Pursuant To
N.J.S.A. 48:2-21 And N.J.S.A. 48:2-21.1

Good evening.
My name is Elaine A. Kaufmann and I am an attorney representing the New Jersey
Division of the Ratepayer Advocate. Our office was created by the New Jersey
Legislature to represent ratepayers in cases such as this where a utility seeks
an increase in rates or a change in services.

In compliance with the New
Jersey Board of Public Utilities (“BPU” or “Board”)
Orders dated April 30, 2003 and July 16, 2003, Jersey Central Power and Light
Company (“Jersey Central”) and New Jersey Natural Gas Company (“New
Jersey Natural”) individually filed proposals on April 1, 2004 with the
Board requesting an increase in their electric and/or gas rates to recover the
costs of the Permanent Universal Service Fund (“USF”) program. The
USF Program was established by the Board pursuant to the New Jersey Electric
Discount and Energy Competition Act to assist qualifying low-income customers
in paying their energy bills.

On June 18, 2003, the Board
established a statewide program through which funds are collected from all energy
customers through a uniform rate system. The New Jersey Department of Human
Services (“DHS”) serves as administrator of the funds and authorizes
the disbursements to benefit eligible energy customers. Based on the information
that is known to date, the 2004-2005 USF rate is proposed to collect $105.5
million on a statewide basis.

In the Jersey Central USF
Program filing, the Company proposed an increase to its electric customers ranging
from $1.88 to $7.52 per year depending on usage. If approved by the Board, the
impact on a monthly residential electric bill reflecting 600Kw – 1,200Kw,
would be an increase of between .48 and .45 percent, or less than one half of
one percent.

In its April 2004 filing,
New Jersey Natural proposed an increase for its residential gas customers ranging
from $.15 to $1.24 per month, or between .46 and .56 percent, based on usage
from 25 therms per month to 200 therms per month. The cost for a residential
gas heating customer, reflecting 200 therms of usage during a winter month,
would increase by $1.24 per month under the Company’s proposal.

If, before July 1, 2004,
the DHS or the Board modifies the USF Program so that the benefits to participants
or the cost of the USF Program will increase further, the utilities are proposing
to include that increase in the July 1, 2004 rate change.

The electric and gas utilities
have also requested that, if the DHS or the Board increases the costs or benefits
of the USF Program after the July 1, 2004 rate change by at least $5 million
annually on a statewide basis, the utilities be given the authority to increase
the above-referenced electric and gas USF Program charges upon 30 days prior
written notice to the Board and the Division of the Ratepayer Advocate. Any
such increases would be reconciled in the utilities’ next scheduled annual
USF filing, to be made no later than April 1, 2005.

Jersey Central states that
for every $5 million over the currently estimated $105.5 million in 2004-2005
USF Program costs, the Company’s bills would increase by approximately
0.04%, or an additional 30 cents per year above the increase mentioned earlier
for a residential electric customer using 7200 kilowatt-hours per year.

New Jersey Natural states
that for every $5 million over the currently estimated $105.5 million in 2004-2005
USF Program costs, the Company’s bills would increase by approximately
0.03% above the increase mentioned earlier for a residential gas customer using
100 therms per month and 1,000 therms annually.

Our office is engaged in
a complete review of the filings by Jersey Central and New Jersey Natural based
on the information that is being supplied and updated by the Companies. We have
retained the services of expert consultants to assist us in our review. The
Ratepayer Advocate's inquiry is focused on the critical issues of whether the
proposals allow ratepayers to pay the lowest rates possible consistent with
the Board’s Order. The Board will make the final decision regarding the
proposals.

The purpose of today’s
hearing is for you, the customer, to voice your opinion, relate your experiences
and offer comments about your Company’s rates and any service problems
you may be experiencing. It is important that you express your views so they
may become part of the record on which the Board of Public Utilities will base
its decisions. The Ratepayer Advocate also needs to hear your views. Your active
participation is strongly encouraged to help in our evaluation of the Companies’
proposals and our preparations.

This hearing is being transcribed
and your comments will become part of the record. I would like to reiterate
the importance of your participation so that the Ratepayer Advocate can have
a clear record of your concerns and interests.

On behalf of the Ratepayer
Advocate, I would like to thank you for attending tonight’s hearing.